NSW Premier Barry O’Farrell says the worst is over for Grafton residents after the Clarence River peaked and started receding.

The river peaked on Tuesday just below the height of the levee wall in a record flood that caused the evacuation of 2100 people.

Mr O'Farrell flew into the northern NSW city to assess the damage caused by ex-tropical cyclone Oswald, which has saturated large parts of the state and Queensland in the past few days.

The Premier said that while there was still concern for communities downstream, "it does appear as though the worst of it is over".

"I’m delighted that whilst at 11 o'clock the river peaked at 8.08 metres, it's now at 7.95 metres, it is going down," Mr O’Farrell said.

The State Emergency Service said at 1pm that many of the levees protecting the city appeared to be holding, but there were reports of some water breaching the barrier near Fry Street in Grafton. The extent of any damage was not known.

More than 2100 residents in Dovedale and North Meadow were ordered to leave their homes at 8.30am on Tuesday ahead of predictions that the Clarence River would hit a record peak of 8.1 metres at Grafton at midday.

About 7000 other residents in North Grafton and South Grafton were warned to prepare to evacuate if conditions worsened. An evacuation centre was set up at South Grafton High School.

But the river peaked at 8.08 metres, just shy of the expected peak.

The levee banks along the river are inconsistent in height and were bolstered by residents and emergency service workers, who placed sandbags along the top.

At 1pm, SES spokesman Andrew Richards said the river level appeared to he holding steady around the predicted peak, but it was unclear whether the peak had been reached.

"We've received, at this stage, reports of water behind the levee around Fry Street," he said.

However, the damage to properties would not be assessed until the river started to recede in Grafton.

He said water also had been reported behind the levee downstream at Ulmarra and Maclean. The extent of any damage there was not known.

Mr Richards said the Clarence River was not due to peak at Maclean until midnight.

On Monday night, about 1500 residents downstream of Grafton - in Ulmarra, Cowper and Brushgrove - were ordered to leave their homes about 7pm.

The Bureau of Meteorology has issued a major flood warning for the Clarence Valley, and a moderate flood warning for the Orara River.

"There has never been a flood of this height in recorded history of Grafton, so for everybody who is trying to work on this and make all of the predictions, there isn't historical data to go on. The river is showing signs of dropping further upstream and that is what we have to work with at the moment."

The SES estimates 23,000 people are isolated by floodwaters in northern NSW as a result of the recent torrential rain.

The flooding was due to heavy rain from the past few days flowing into the Clarence River upstream. At nearby Lilydale, the Clarence River peaked at 20.94 metres at midnight on Monday. That was close to the 1954 flood peak of 21 metres.

Separate low-pressure system

The remnants of ex-tropical cyclone Oswald stalled over northern NSW on Monday night, but a separate low-pressure system formed over the Hunter and beat a path down the coast to Sydney.

The Bellinger River has received 280 millimetres of rain since 9am on Monday, the heaviest rainfall in four years.

Flood waters have cut Bellingen in half, and the main bridge there is completely under water.

The heaviest rainfall in the Illawarra was on the escarpment, which received 150 millimetres of rain, while Wollongong received 120 millimetres, the heaviest daily rainfall total in two years.

Wind gusts of 100km/h were reported in Coffs Harbour overnight, but in Sydney the wind was not as fierce as predicted, peaking at 70km/h on Sydney Harbour.

Sydney saturated

Weatherzone meteorologist Brett Dutschke said Sydney was saturated in widespread rainfall totals of between 80 and 150 millimetres overnight, causing localised flooding in some areas, including Camden.

The wettest area of the city was Frenchs Forest, which received 161 millimetres in the 24 hours to 9am on Tuesday.

Richmond was saturated in 111 millimetres of rain, the biggest daily total in 16 years in the suburb, while Bankstown, Canterbury and Badgerys Creek recorded 100 millimetres, the heaviest in 12 years.

Mr Dutschke said many of Sydney's western suburbs received their heaviest daily rainfall totals in five years overnight.

But Mr Dutschke said by 5am on Tuesday, the heaviest rainfalls had passed for Sydney.

"It will take a little bit longer for it to ease off in the Illawarra and the South Coast.''

Calls for help

State Emergency Service spokesman Michael Eburn said officers had responded to 2900 calls for assistance for help across NSW, mostly in the north of the state.

However that number could rise rapidly as people wake on Tuesday and assessed the damage to their properties.

"Our local units have been out in Sydney dealing with localised flooding in Camden and normal call outs, such as trees down and leaking roofs," he said.

"It has certainly been more significant in the north of NSW. We've evacuated low-lying areas of North Lismore and a couple of evacuation warnings were issued for Grafton.

"We've done 19 flood rescues, and most of those are avoidable things - people entering floodwaters despite our advice."

Dangerous surf

The Bureau of Meteorology issued a severe weather warning on Tuesday for damaging surf in the Metropolitan, Mid North Coast, Hunter, Illawarra and South Coast forecast districts.

Mr Dutschke said dangerous surf conditions were expected today and for the rest of the week, with waves of up to six metres expected to hit beaches.

A Sydney buoy, however, recorded waves up to 10 metres.

"There is a fair bit of beach erosion going on," Mr Dutschke said. "The surf is going to be dangerous for a fair while after this rain clears, probably until the end of the week. The sea is going to be pretty mucky as well."

Mr Dutschke said there was the chance of showers and thunderstorms in coming days.

"While this rain is becoming much lighter and clearing, there is still a moderate amount of instability and it's enough to cause afternoon showers to develop for the next few days and even a few storms, in eastern parts of NSW and Queensland," he said.

Roger and Caroline Richardson go swimming near Collaroy surf life saving club every day, but despite the surf being too rough for the seasoned swimmers on Tuesday, they couldn't help getting their feet wet.

"These are some of the heaviest waves we've seen in 20 years," Mr Richardson said.

"But the water is wonderful and warm, though you won't catch anyone swimming out there today. It's very dangerous."

Local author, Val Maudson, watching the waves crash onto the footpath, said she had seen it get much worse. She grew up in the area, where she has lived most of her life.

"I remember in the Second World War, there was heavy flooding through all the houses that used to be along here.

"What was most shocking was seeing people's personal belongings, pots and pans and other things, floating in the surf."

One young body-boarder said he usually surfed but Tuesday's conditions were perfect for bodyboarding in Collaroy Pool.

"It's like a washing machine in there," he said.

"It's great fun."

Road closures

The Transport Management Centre said a number of roads and highways were closed across the state, including the Pacific Highway between Grafton and Ballina.

On Tuesday morning, the following roads were closed due to flooding:

In the state's north:

- The Pacific Highway between Ballina and Grafton at Shark Creek and Swan Creek.

- The Summerland Wayabout 11 kilometres south of Kyogle and about 10 kilometres south of Casino.

- The Gwydir Highway about 70 kilometres west of Grafton at Jackadgery due to a landslip.

- Armidale Road between Ebor and Nymboida.

- The Gwydir Highway at the Gibralter Ranges in Glen Innes due to fallen trees.

- Bangalow Road between Bangalow and Lismore.

- Tweed Valley Way in Murwillumbah.

In the state's north-west:

- The Newell Highway between Boggabilla and Moree with no access to the Newell Highway from Queensland.